Ceteris paribus,if incomes increase faster in the United States than in less developed countries,then the currencies of less developed countries should

Question

Quizplus · Accepted Answer

If incomes increase faster in the United States than in less developed countries, then demand for goods and services produced in the US would increase, leading to an appreciation of the dollar. At the same time, demand for goods and services from less developed countries would decrease, leading to a depreciation of their currencies. Therefore, less developed countries' currencies should appreciate (relative to their own value) but depreciate (relative to the dollar).

Ceteris Paribus,if Incomes Increase Faster in the United States Than